Match local governments' revenues with their duties

The fiscal and tax distribution reform plan is one of the most notable parts of the comprehensive reform plan named "383" after its contents, unveiled by a top think-tank of the central government, said an article in the 21st Century Business Herald (excerpts below).

According to the plan, which is believed to be the blueprint of the reform plan of the Third Plenary Session of the 18th Central Committee of the Communist Party of China, the central government should be responsible for basic pensions, the judicial system, food and drug safety, border defense as well as some trans-regional and maritime affairs.

If implemented, it means the central government will not give more revenue to the local governments and concentrate more powers and responsibilities in its own hands.

The ideal state of the revenue distribution between the central and local governments is to match government revenue with their duties, but not to re-divide their duties in a bid to maintain the revenue of the central government.

According to the plan, local governments should regard property and consumption tax as the main source of revenue and start levying resource and environmental taxes.

Yet, translating this solution into real revenues for local governments may take time. So the central government must strengthen its transfer payments and make the payments more transparent.

The basic social security package, which is paid by the central and provincial governments, is of great significance for the migrant population.

The next round of reform should also stress that People's Congresses at various levels must supervise the local governments making, and implementing, budgets.